Leica will continue with capital increase

Leica will continue with capital increase : Leica Camera AG has achieved a settlement out of court with four plaintiffs in the actions for avoidance, among them Leasing- und Handelsservice Heinrich GmbH (Hettstadt) and EO Investors GmbH. Their actions for avoidance of the capital measures resolved by the General Meeting on May 31, 2005, which had been the subject of the ad hoc announcement of July 15, 2005, have been settled with mutual agreement. The remaining fifth action for avoidance had been brought in an unlawful way. It is expected that the procedure will be closed without further proceedings. Leica Camera AG will publish the invitation to subscribe for the capital increase in the electronic Federal Gazette without delay.

Leica - Shareholders participation
The proviso made by major shareholders Hermès International SCA, Paris, France, and ACM Projektentwicklung GmbH, Salzburg, Austria, concerning their participation in the capital measures is thus no longer applicable. Both these major shareholders have confirmed, in conformity with market practices, in writing vis-à-vis Leica Camera AG that they intend to participate in the capital increase at least to the extent of their existing interests in the Company.

Leica - Board of Management
The Board of Management of Leica Camera AG is very optimistic as concerns the ability to now implement the capital measures resolved by the General Meeting and, in doing so, create the basis for the rehabilitation and restructuring.

Leica Camera AG - Settlement
A major part of the settlement of the avoidance procedures with mutual agreement between Leica Camera AG and the opposing shareholders is the establishment of a subscription rights agency exclusively for the existing shareholders. The latter are defined as those who are shareholders of the Company at the end of the trading day preceding the trading day on which the shares are quoted “ex-rights” for the first time. The brokerage will be carried out by DKM Wertpapierhandelsbank AG and will be subject to the proviso that no prospectus publication is required.

Hermès International SCA and ACM Projektentwicklung
In addition, Leica Camera AG has undertaken to include the new shares originating from the cash capital increase in the regulated unofficial market of a domestic stock exchange within a period of six months after their origination and will to the best of its ability seek to achieve admission of the new shares originating from the capital increase to trading in the Official Market or Regulated Market within a period of nine months. In case this cannot be effected in time, the two major shareholders of the Company (Hermès International SCA and ACM Projektentwicklung GmbH) have guaranteed to all shareholders a right, limited in time, to have the shares subscribed by them exchanged for stock-exchange listed shares. The total volume of the exchange rights is limited to a maximum of 450,000 no-par value shares (in relation to the capital structure after the capital reduction). Details will be published in the electronic Federal Gazette. The measures agreed on will be to the benefit of all existing shareholders, not only to the benefit of the plaintiffs in the actions for avoidance.

Board of Management of Leica - Wrong press release
The Board of Management of Leica Camera AG states that the conjecture made in the press release of July 19, 2005 that the plaintiffs in the actions for avoidance, as expressly named in that release, had intended by bringing such actions to bring about individual compensation payments or other advantages was not right.

Leica - Secure full participation
The Board of Management is convinced that the plaintiffs in the actions for avoidance are aiming at securing the possibility for the minority shareholders, on the basis of their hitherto existing interests, to keep their full participation in the share capital of Leica Camera AG, amounting to 40% of that capital’s total, as well as the possibility to contribute actively to the restructuring of the Company. Leica Camera AG has in no form or fashion granted, or promised to grant, any individual benefits to the opposing shareholders. The Company has, however, agreed to accept the costs of the agreement.

Leica AG - Additional provisions
On August 5, 2005, the Board of Management of the Company has resolved additional provisions. These will be included in Leica Camera Group’s result for fiscal year 2004/2005 (March 31) in an amount of EUR 4.5 million. The loss for the year will come to approx. EUR 20.0 million, with sales reaching EUR 93.7 million. The additional burden on the result due to issues concerning valuation had been announced at the General Meeting of Leica Camera on May 31, 2005. The burden is mainly due to inventory devaluations and depreciation of fixed assets because of revaluation of inventory range.

Leica Camera AG - Development of business
The restructuring measures in the Company’s management, development, production and logistics are beginning to take effect. Despite the insecurity felt during recent weeks by both customers and business partners due to the financial situation of the Company, sales in the first four months of the current fiscal year 2005/2006 are slightly above the he Company’s expectations and markedly above the previous year’s comparable figure.